Quel de sara sara ...Reserve Bank of India is no more. On afternoon Feb.29, 2016, Mr. Arun Jaitley, the union finance minister, said Bye.... The RBI governor will have a casting vote in a 6-member Monetary Policy Committee (MPC), not veto power. The RBI will be a cricket team without a captain.The 6-member MPC will have three from the government and three from the RBI including the RBI governor. In Mint, Aparna Iyer and Jayshree P. Upadhyay write: 'The six-member MPC, once formalised, will decide on interest rates as against the current norm of the RBI governor and his internal team having complete control over monetary policy...The final composition announced by the government seems to tread the middle path as it tries to address concerns over excessive government influence on monetary policy. With the introduction of MPC, RBI will follow a system similar to the one followed by most global central banks such as US Federal Reserve and the Bank of England.' George Mathew in The Indian Express says: 'However, Jaitley did not spell out details of the proposed committee, especially if the RBI governor will have a casting vote.' Expected a comment from the former and best RBI governor, Dr. C. Rangarajan. In the Economic Times, the gentleman skirts the RBI issue with which he spent many years as deputy governor and governor. Sad. If the 6-member committee votes 4-2 on rate cuts with RBI governor in a minority, he does not have a veto vote to overturn the decision; in a tie he will have a casting vote; with that RBI and RBI governor will not decide on interest rates; it will be the Finance Ministry; the Finance Ministry will set the fiscal deficit, run the interest rates while the RBI will work the inflation target mandated to it; do not know whether it can be done; over time when debt management is taken away from RBI, Mint Street will not have an address. To Mint, A.V. Rajwade, an independent expert, says: 'RBI will still have control over monetary policy despite the committee deciding on rates. Looks like the governor got what he wanted.' Are you sure, Mr. Rajwade. Dr. Chakravarthy Rangarajan (Ranga to friends) was the deputy governor, RBI, from 1982-1991; governor from Dec. 22, 1992 to Dec. 21, 1997. In me books, the best RBI governor; he freed all interest rates except savings rate; allowed banks to freely price their loans and not wait for RBI okay; ahead of kharif and rabi season credit policy, met market players, bankers, academics, rounds of meetings with RBI staff apart from the Finance ministry, before taking a final decision. Dr. Manmohan Singh, unlike Pranab Mukherjee, P. Chidambaram and Arun Jaitley, let go; they did talk, they differed; they accepted each other. Today, RBI is superfluous; Dr. Raghuram Govind Rajan, is a dispensable extra. Why hang around, Doctor? Quel de sera, sera....
Monday, February 29, 2016
RBI....Quel de sara sara....
Quel de sara sara ...Reserve Bank of India is no more. On afternoon Feb.29, 2016, Mr. Arun Jaitley, the union finance minister, said Bye.... The RBI governor will have a casting vote in a 6-member Monetary Policy Committee (MPC), not veto power. The RBI will be a cricket team without a captain.The 6-member MPC will have three from the government and three from the RBI including the RBI governor. In Mint, Aparna Iyer and Jayshree P. Upadhyay write: 'The six-member MPC, once formalised, will decide on interest rates as against the current norm of the RBI governor and his internal team having complete control over monetary policy...The final composition announced by the government seems to tread the middle path as it tries to address concerns over excessive government influence on monetary policy. With the introduction of MPC, RBI will follow a system similar to the one followed by most global central banks such as US Federal Reserve and the Bank of England.' George Mathew in The Indian Express says: 'However, Jaitley did not spell out details of the proposed committee, especially if the RBI governor will have a casting vote.' Expected a comment from the former and best RBI governor, Dr. C. Rangarajan. In the Economic Times, the gentleman skirts the RBI issue with which he spent many years as deputy governor and governor. Sad. If the 6-member committee votes 4-2 on rate cuts with RBI governor in a minority, he does not have a veto vote to overturn the decision; in a tie he will have a casting vote; with that RBI and RBI governor will not decide on interest rates; it will be the Finance Ministry; the Finance Ministry will set the fiscal deficit, run the interest rates while the RBI will work the inflation target mandated to it; do not know whether it can be done; over time when debt management is taken away from RBI, Mint Street will not have an address. To Mint, A.V. Rajwade, an independent expert, says: 'RBI will still have control over monetary policy despite the committee deciding on rates. Looks like the governor got what he wanted.' Are you sure, Mr. Rajwade. Dr. Chakravarthy Rangarajan (Ranga to friends) was the deputy governor, RBI, from 1982-1991; governor from Dec. 22, 1992 to Dec. 21, 1997. In me books, the best RBI governor; he freed all interest rates except savings rate; allowed banks to freely price their loans and not wait for RBI okay; ahead of kharif and rabi season credit policy, met market players, bankers, academics, rounds of meetings with RBI staff apart from the Finance ministry, before taking a final decision. Dr. Manmohan Singh, unlike Pranab Mukherjee, P. Chidambaram and Arun Jaitley, let go; they did talk, they differed; they accepted each other. Today, RBI is superfluous; Dr. Raghuram Govind Rajan, is a dispensable extra. Why hang around, Doctor? Quel de sera, sera....
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment